When Mahatma Gandhi pronounced: “We must become the change we want to see”, it is unlikely that the UK financial services industry was foremost in his thoughts.
However, as the last 10 years or so have led us to the midst of the greatest upheaval the industry has ever undergone, it seems that Gandhi may have had a point. Where do providers and IFAs want to be? Perhaps more importantly, is there a shared vision at all or is more fundamental change in the offing?
Whether one considers the current climate as exciting, challenging, depressing or disastrous, there is no doubt that opportunities will arise for those with the appropriate vision and delivery skills.
How this occurs and who ends up holding the balance of power is largely up to the participant although I believe strongly that IFAs have the opportunity to grab the initiative. IFAs who embrace new technology to improve their business processes, who take a longer-term view of their business by introducing more extensive (even if largely automated) client support and who adopt a more professional marketing strategy will thrive.
This is for the simple reason that there will always be a market for quality financial advice delivered in a professional manner. Even in the US, where investors are allegedly more sophisticated (financially at least), the demand for advice has never waned. The technology has merely been used to streamline matters and to cut out the unnecessary costs that were being absorbed by no-value processes.
On the technology front, while some life offices can justifiably claim to have made advances over recent years, there is little doubt that these have often been too little, too late and too inaccurate to IFAs. The delivery has seldom lived up to the hype and IFAs have been left frustrated.
This is unlikely to be the case with the kind of technology that we are seeing from fund supermarkets and portal services. IFAs now have the opportunity to offer their clients a genuine level of service on a strong and established technology platform.
Large parts of the IFA's back-office admin cease to be so time-consuming and many client enquiries can be responded to with no intervention. While one cannot take accuracy for granted, the more transparent approach of supermarkets means that less time and resources need be tied up dealing with trivialities such as statement enquiries. Furthermore, IFAs can promote the supermarket within their own branding, strengthening client relationships.
IFAs who can deliver on these issues will continue to prove that distribution is king. It is clear from the short-term approach being followed by many life offices on stakeholder that this is also their view. The balance of power may be drifting even further in favour of IFAs and every adviser should ensure they are well placed to maximise the opportunities that will arise.
While this all sounds very optimistic, there is one fairly obvious area of concern. With it being this easy for existing IFAs to deliver such an attractive solution, it will be similarly easy for new firms. Although they may be handicapped by a lack of an active client base, this does not mean they cannot make inroads.
I close with some pearls from Albert Einstein. His view that “In the middle of difficulty lies opportunity” cannot be argued with. What is critical for IFAs is to identify the opportunities, develop an appropriate strategy and deliver it. If the present incumbents do not, then someone else will.
David Ferguson is a director of product design and marketing consultancy the abacus. You can chat about this subject at www.the-abacus.com/ chat on Monday, February 12 at 12 noon.